Outsourcing Manufacturing to China
Every business operation has a goal that drives them to earn greater profit. These business organizations maintains a Profit and Loss account, Income and Expenditure account, Balance Sheet wherein they make an effort to keep the loss low and profit high; expenditure should not exceed income and liabilities should not be more than their assets. This is essential for all business firms since an organization will not be able to survive for too long if they continue to incur losses for consecutive years. Cost reduction is the key for their survival. Cost reduction helps to attain profit which can be reinvested in the business for its longevity and smooth functioning. In order to achieve this mission, companies should re-establish their position by securing outsourcing manufacturing from China. Apple is a well-known example for outsourcing manufacturing to China. They have all of their ipads, iphones and Macbooks assembled with a company called Foxconn in Shenzhen China, who provides electronic manufacturing services as private label manufacturers through OEM services for Apple. Then they use China freight forwarder to import from China for their finished merchandise and shipping from china to us.
Companies which want to grow and sustain themselves in the midst of cut throat competitive market strategically hire people outside of the company and at times, outside the country (in which they have their head office) to either manufacture entire product or just assemble parts of the products. Making outsourcing manufacturing as a part of production line helps them substantially to reduce the cost of their overheads.
Important Points of Outsourcing Manufacturing from China
Outsourcing manufacturing is the most sensible thing any organization can do. To justify this statement, have a look at the following reasons that sound reasonable enough to businessmen. Listed below are some important benefits of choosing China for outsourcing manufacturing process.
Economy of China
The recent decade has witnessed the economy of China ascending at an incredible rate. It has established itself as the world’s largest outsourcing manufacturing economy. The economy of China has been soaring rapidly particularly in the last few years. It has embraced considerable industrialization equipped with modernized technology. China is the host of the largest consumer market and the second largest importer of goods and services. Countries such as Australia, New Zealand, South Korea, Switzerland, and other Asian nations consider outsourcing manufacturing to China a gainful business relationship which has led them to sign free trade agreements with China. The country is recognized for being the largest manufacturing country on the earth since it is serving one-fifth of the world with its manufactured products. Since the economy of China has made a significant yet steady upward trend, organizations find it safe to invest in outsourcing manufacturing in China. Even the government of China has amended and issued fresh policies in order to eliminate obstacles that have been hindering accelerated growth in the economy of the country. The government offers tax incentives and certain tax exemption to persuade foreign companies and overseas investors to invest their profitable earnings in the country for manufacturing their products in China.
Capital is pre-requisite for every organization to thrive. It is not only needed for the smooth operation of the organization but also for routine upgrading of equipment, staying in tune with technology, appointing experts and skilled personnel, advertisement and promotion of their service and product, etc. In order to attain financial benefit that encompasses overall development of the organization, improve balance sheet and increase cash flow, outsourcing manufacturing from China has proved to be rather useful, particularly to firms facing financial crunch. The organization should adopt means and methods that bring up to code so that they can compete with the top companies not just in the local market but also create a name for itself on the global platform. The firm must regularly review, evaluate and analyze the operating cost of in-house in comparison to the operating cost of outsourcing manufacturing in China. Apparently, the result of outsourcing manufacturing from China will always yield greater returns for the organization. Transferring manufacturing to China for outsourcing provides immense financial support to such companies, thereby playing a crucial role in profitable venture.
Reduced Labor Costs
China manufacturing capability has by far the world’s largest because it benefits significantly from the low labor cost due to their largest population in the world. The most typical reason to outsourcing manufacturing to China is obviously low labor cost. Holding the position of the highest populated country in the world, it provides affordable outsourcing of laborers. Oversea companies are able to reduce their operating cost by outsourcing labor simply by appointing and employing workers temporarily or permanently. It not only extends flexibility but brings down the manufacturing cost of a product to a great extent. This in turn helps them reap greater amount of profit.
After all these years being the world’s factory, China is no longer a country which can only manufacture jeans or plastic jars from labor-intensive industries, but also it has expand its scope to the high-tech industries like aerospace engineering, automation, electronic and computer engineering. Even if you are an entrepreneur with no solid technical background, you can hire the company to do R&D design and make prototype in China for you. In a town called Shenzhen, which is known as a place in China for sourcing electronics, you can create your own gadget by having someone create your PCB in China and get the devices assembled as finished products. If you have the confidence with the market you can thereinafter also have the product for mass production. With the help of a sourcing company for product sourcing, e-commerce business owners can also create Amazon private label products by their services offered for Amazon sourcing.
Best for Small and Mid-size Companies
It goes without saying that cash is crucial for operating a company. The amount derived after settling the expenses of manufacturing products and services and operating a business is the financial gain of the company. This surplus amount can be re-invested in the business enabling small and mid-sized companies to expand the periphery beyond the boundaries of the country in which they operate. They are able to achieve considerable profit if they adopt outsourcing manufacturing to China since it reduces their running cost and overhead expenses such as electricity bill, maintenance cost of equipment, labor, etc. When businessmen outsource manufacturing at cheap rate, they can focus better on marketing strategy, expansion policies, etc. More and more small business concerns and start-ups are opting for China to initiate outsourcing of the manufacturing process. The company is able to cover their expenses and also earn enough to promote their business worldwide. They can also consider selling their product in the local market which would enable them to save on shipping and transportation cost of the products. This would increase the demand of their products by 10-folds and thereby increase financial gains.
Enjoy the Benefits of Mass Market
Asian market is expanding and growing at an incredible rate and China is an imperative part of this market. When you outsource manufacturing to China, you get an access into the Chinese market and can easily expand your footprint into the Asian market.
Tips to Help in Outsourcing Manufacturing To China
Now that you have studied about the benefits that can be incurred when you plan to outsource manufacturing to China, the next step is obvious. You would definitely like to get tips on how to go for successful outsourcing manufacturing to China. Here are some of the relevant tips and tricks that can lend you a helping hand in doing so.
Always hire a local agent to represent yourself
China is a country which conducts most of its business using its local language only. Moreover, since it is a foreign country to you, it is always advisable to hire any local agent who can represent yourself. This local agent can work on your behalf, negotiate on your behalf, and look for business opportunities for you. Moreover, it is always easier for your local source to get connected with other local resources. This would definitely assist you in growing your business prospects in China.
Search for Manufacturer of Your Product
Sourcing products from China is not a trivial task. Do research and try to find a local manufacturer for your product. You can take the help of trade fairs for doing so. Trade shows in China brings together all kinds of traders and manufacturers in one place. Thus, visiting a trade fair increases your chances of getting that one particular manufacturer for your product. You can even take the help of trade magazines for doing so.
Establish Business Relationships
Chinese working culture depends majorly on business relationships. Thus, it is imperative for any business person or firm to form good relations within the market. Then only can your business flourish. However, one important aspect of building business relationships is following certain Chinese customs. For example, when you are presenting your business card to someone in China, do so by using both your hands for doing so. However, you take help of your local resource who can get you well versed with Chinese cultures and customs.
Do not have blind faith. Try to audit the manufacturer’s factories beforehand and even after the process has started. This would make sure that you get the desired quality when you outsource manufacturing to China.
Now that you have taken note of the tips on how to outsource manufacturing to China as well, you need a manufacturing partner in China. Though there are many such firms that can be your manufacturing partners, but CNSourceLink is the best.
CNSourceLink is a sourcing company that offers its assistance to people who wish to do business in China. The firm holds long years of experience in doing so and has been quite successful in the venture as well. They hold a reputation of providing all desirable services to the firms interested in doing business in China.
When you make a decision to outsource manufacturing your product to China, you would definitely want a local resource in China. The local resource should be capable, creative, and of course reliable. If we go by the client review for CNSourceLink, you will get to read all about these desirable qualities. Moreover, CNSourceLink has created a strong base for itself in the Chinese market and can assist you in the best possible manner to establish your business in the nation.